Effect & Impact of Inflation

INSTITUTE OF *BUSINESS* AND TECHNOLOGY
ABSTRACT
This report is designed to investigate the relationship between poverty and inflation in Pakistan. This report also involves a secondary research to determine the impact of inflation on poverty in Pakistan. Pakistan level has been taken in terms of two different variables:
First is the headcount percentage which is the percentage of total population living below the poverty line; the other is the ginni coefficient that measures inequality and it ranges between 0 and 1 with 1 being the perfect inequality while zero being the perfect equality. According to conventional economic principles, a change in genera price level reduces the real income, provided that the nominal income remains the same. The decreasing real income means the purchasing power of an individual is eroding; this erosion might propel certain proportion of population below the poverty line. This report ha used regression analysis to determine the level at which a change in inflation affect the poverty level. The empirical result show that the effect of inflation on poverty headcount is in fact negative- a percentage in inflation actually results in a decrease in poverty headcount percentage but the decrease in poverty is insignificant. The empirical results of the effects of inflation on ginni coefficient show a positive relationship – that is a percentage increase in inflation actually results in percentage increase in ginni coefficient.
Acknowledgement
First of all I would like to thank Almighty Allah for giving us the strength and courage to complete this project
I would like also to thank our instructor, Dr.Noor ahmed Memon for giving me this project as it greatly helped me in clearing my concept of this subject and applying them practically in the corporate world .
Finally, I would like to thank al the participants, those people who filled questionnaires all over our office and others over Karachi who provided me with all the...